On Wednesday, two physicians and the owner of an assisted living facility in Houston were arrested on charges involving Medicare Fraud. These arrests are related to the recent series of articles in the Houston Chronicle documenting large volumes of Medicare payments going to Ambulance services who transport mental health patients from assisted living facilities and residences to these mental health programs.

These issues are just the tip of the iceberg. I don’t represent any companies involved in this business (yet), but Trailblazer and other Medicare fraud control entities are definitely paying attention to ambulance services. If you are an ambulance service provider and you don’t have a compliance program, now would be a good time to investigate the options. After the jump: the Houston Chronicle story documenting the arrests and links to the other Houston Chronicle stories and to the FBI press release announcing the arrests.

3 arrested in $90 million Medicare fraud scheme

By TERRI LANGFORD, HOUSTON CHRONICLE

The owners of a Houston mental health program were arrested Wednesday, charged with trying to bilk Medicare out of $90 million for treatments that amounted to little more than patients “watching movies, playing bingo or engaging in other activities,” federal authorities contend.

Mansour Sanjar, 78, and Cyrus Sajadi, 64, both physician owners of Spectrum Care in West Houston were charged in the alleged phony treatment scheme, which involved kickbacks to the owner of an assisted living facility in exchange for finding and funneling patients to the clinic.

Chandra Nunn, 33, the owner of the home, also was arrested Wednesday. All three are charged with conspiracy to commit health care fraud and conspiracy to pay and receive illegal health care kickbacks. Since 2006, Center and Sajadi had been submitting bills to Medicare for supposed treatment at their “partial hospitalization program,” known as a PHP.

The arrests come just two months after a Houston Chronicle investigation uncovered hundreds of millions in Medicare dollars spent to shepherd mentally fragile Texans by ambulance to mental health clinics and PHPs where patients claimed they watched TV and ate junk food.

According to the indictment, the Spectrum Care owners submitted $90.4 million in claims starting in 2006 even though the PHP services “were not medically necessary, and in some cases, never provided.”

Nunn’s role was that of a patient broker, or what clinics call, a “marketer.” Sanjar is accused of paying Nunn with a $10,000 check in September 2010 to refer patients their way.

The indictment accused all three defendants of paying Medicare beneficiaries cash and cigarettes if they came to Spectrum. Attempts to reach the three were unsuccessful.

Texas Medical Board records show the agency disciplined Sajadi last February for failing to keep good records on a patient. The doctor did not admit to or deny the findings but agreed to complete in one year, eight hours of continuing education on medical record-keeping. In 2005, Sajadi was ordered by the board to complete nine hours of ethics courses, pay a $1,000 fine for violating a state law that requires a doctor who denies medical records to explain why the information was not provided.

Love & Caring Homes

The board also disciplined Sanjar in 2003 for overprescribing narcotics to a patient.

The federal charges filed Wednesday did not list the name of Nunn’s facility. Public records show she is the registered agent for an operation called Love & Caring Homes Inc., that was incorporated on June 28, 2010. It is unclear whether the home was licensed by the state.

Spectrum is one of nearly two dozen community mental health centers and PHPs in Harris County that have collected millions in Medicare dollars, but require no license to operate in Texas, the Chronicle’s investigation in October found.

The patients are mostly poor, some near homeless, who live in personal care homes, assisted living facilities – like that owned by Nunn – or apartments arranged by caretakers and caseworkers.

Ferrying patients

The paper’s investigation also documented that the burgeoning business of mental health care in Houston is further fueled by the local private ambulance industry, which ferries patients to therapy and also bills Medicare.

Nearly $500 million was paid by Medicare to private EMS operators in Harris County over a six-year period, records show. By the federal government’s own rules, many of these EMS transports are not medically necessary and should not even qualify for federal dollars.

“This case is another excellent example of the partnership and cooperation between the U.S. Attorney’s Office, the Department of Justice and our investigating agencies,” said U.S. Attorney Kenneth Magidson of the Southern District of Texas. “We will continue to work closely with each other to ensure those who engage in such fraudulent health care practices are brought to justice.”

According to Medicare data obtained by the Chronicle, Spectrum Care received more than $1 million from Medicare in 2010. The indictment filed Wednesday indicates Spectrum Care has been paid more than $6.5 million since 2006.

Private ambulance data obtained by the Chronicle also shows private ambulances making trips to Spectrum collected more than $19 million in Medicare money in recent years.

More charges?

When asked about whether ambulance companies would be charged in relation to Spectrum’s scheme, U.S. Department of Justice spokeswoman Alisa Finelli would say only that “our investigation into Spectrum is ongoing.”

A report released Wednesday, based on 2011 Department of Justice data, shows Houston is second in the nation for Medicare fraud prosecutions. When grouped with Miami, these two federal court districts accounted for more than one of every five health care fraud prosecutions.

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